A ‘Black Cloud Of Inventory’ Hangs Over Nevada
Some housing bubble reports from Nevada. The Review Journal, “With more than 20,000 homes on the MLS in Las Vegas, some are taking six months or longer to sell. There were 4,271 recorded resales in Clark County in June, compared with 5,767 in the same month a year ago, local firm Home Builders Research reported.. The year-to-date total of 23,305 is down 20 percent from a year ago.”
“‘The resale segment continues to be gripped by the investor hangover that is like a black cloud of inventory,’ Home Builders Research President Dennis Smith said.”
“Warren Pincus is having a hard time selling his 1,600-square-foot, two-story home in the gated Elk Ridge community in northwest Las Vegas. He’s lowered his asking price from $315,000 to $307,000 and now he’s thinking about changing real estate brokers after only two prospects have come by to look at his house in six weeks.”
“‘I suggested to my broker that we reduce the price. I’m willing to sell for less,’ Pincus said. ‘I understand it’s bad right now and I know the big builders give them dough to bring someone. How can I compete with builders offering 11 or 13 percent (commission)? You can’t. I feel helpless, but that doesn’t mean I am helpless. I’m just so frustrated. That’s the word.’”
From Barrons Online. “The latest housing numbers certainly suggest that the end is getting nearer in Las Vegas. Sales of local homes fell nearly 24% in June from the same period in 2005, while the number of listed homes rose nearly 32% from a year earlier, to a record 20,026, according to the Greater Las Vegas Association of Realtors.”
“The statistics on condominiums and townhouses are even more telling, with listings up in June nearly 83% from a year ago and sales down 22%. ‘We’ve got a dramatic increase in inventory,’ says (broker) Jack Woodcock.”
“‘We’ve got 400 to 500 houses in the $500,000 to $600,000 price range that have never been lived in and are sitting on the market for over a year.’ he said. In fact, a full 40% of all the area’s homes for resale aren’t even occupied, according to First American Title Co. That’s usually a sign of a market that has been inflated by speculative fever.”
The Nevada Appeal. “With interest rates reaching 6.8 percent for a 30-year mortgage, the frantic buying period has cooled. The cost of homes leveled off in mid-2005 and is decreasing, said Carson City Assessor Dave Dawley. The frenzy started in Carson City in 2002, peaked in 2004 and has settled into a buyer’s market.”
“‘We’re still getting people from California willing to pay higher prices,’ Dawley said.”
“The average single-family home sold for $319,000 in the second quarter, which is about 10 percent less than the first quarter, according to the Northern Nevada Regional MLS.”
“The average number of days on the market has also increased. More days on the market means there are not enough buyers and too much product, said Bob Fredlund, an agent in Carson City. ‘We’ve got a saturated market right now,’ he said. ‘A lot of people are trying to sell, and it’s going to be a tough road ahead.’”
“Fredlund said he believes not as many buyers are coming from California. Those who invested in a new property, second home or a resale got their business completed when interest rates were lower.”
“Warren Pincus is having a hard time selling his 1,600-square-foot, two-story home in the gated Elk Ridge community in northwest Las Vegas. He’s lowered his asking price from $315,000 to $307,000
Wow. That’s a 2.5% drop in price from listing. Where does line to purchase begin?
“‘I suggested to my broker that we reduce the price. I’m willing to sell for less,’ Pincus said. ‘I understand it’s bad right now and I know the big builders give them dough to bring someone. How can I compete with builders offering 11 or 13 percent (commission)? You can’t. I feel helpless, but that doesn’t mean I am helpless. I’m just so frustrated. That’s the word.’”
LOL..this whole mess has become an exercise in linquistics.
It’s not a bubble, it’s a “souffle”
It’s not reductions, it’s “adjustments”
It’s not f*cked, it’s “frustrated”
You must mean “linguistics.” Couldn’t help myself :).
oops! Yeah, that’s what I mean….! Thanks!
Perhaps “rebonics”? (like ebonics?)
Here are a couple
of related links: ‘Grant had been enjoying annual double-digit increases in the value of his Reno home on one of the largest lots in his old northwest neighborhood, a product of a booming residential real estate market in Northern Nevada and throughout the West. But much has changed for Grant and the market. ‘I’ve been in and out of (real estate) for some time. And I will say this is probably the second-hardest market I have ever had to sell a home in (behind the energy crisis during the 1970s).’
‘Weisel’s Fuller chimed in that he had detected ‘legitimate interest in the 18-acre parcel’ on which Hard Rock owner Peter Morton had once dreamt of building condos. The bad news is that analyst consensus was that Morgans could expect a baseline sale price of $8 million per acre on land for which it paid almost $11 million an acre. Wall Street’s target is predicated on the highly secretive transfer of the adjacent ‘Las Ramblas’ acreage to Edge Group, not the more hotly contested Hard Rock sale. However, in May, Morgans told Mellet Brown it believed it could re-sell the surplus acreage for $230 million, a $29 million loss.’
Did you notice in that RGJ article that they admitted that the market turned 12 - 24 months ago? Then why is it that they’re just starting to cover how bad it’s become here? There has been rah-rah articles in the RGJ, Nevada Appeal, and the Record Courier all the way up until recently. Admittedly now they’re changing their tune, but it could have been done much earlier.
nnvm
Yes, saw the RGJ story. Reno doesn’t get mentioned much on this site. What’s your take on the Reno market? Median price is higher than Vegas or Carson and the inventory seems staggering. Are we going to see some substantial decrease in prices?
Gee, what a great day for our old friends
LV Landlord
VA Investor (the one with the HELOC checkbooks)\
Homeowner MA
Wonder if any of them can afford a Diet Coke at the local 7-11
LMAO. You beat me to it!!
VA investor - did you see No. Va prices DOWN YOY!!!
I don’t mind a dissenting view, HOWEVER, va_investor is soooo f’n annoying!
I truly loathed that bragging, lying b**tch. Didn’t believe a word she said but was she ever annoying.
Haven’t seen DC broker lately either. Remembered he was bragging about doing buy deals all the time. If he did too many in 2005, he doesn’t have much to talk about now.
Don’t leave out poor BeaConst
I miss LV Landlord comparing the housing bubble to the Y2K scare. That was awesome.
LV Landlord…come out, come out, where ever you are!
He won’t be online for a while. It seems to be that Rent-to-own has repod his computer that he failed to make payments on and his high speed internet got shut off for lack of payment.
Nah, LVL is just trying to find a barber:
http://dallas.craigslist.org/apa/186165203.html
I didn’t realize how bad things had become in LV. Warren Pincus needs to get a clue - a 2.5% price drop? Now is not the time to be stubborn Warren…
Losing money at the craps table instead is looking better all the time to these speculators in LV and Reno. At least on the strip, you can get drinks, entertainment, and girls. The RE broker and mortgage agent can’t provide the same level of entertainment and their fees are higher.
It will be hard to lose money at the craps table going forward now that the housing ATM spigot has run dry…
‘the number of listed homes rose nearly 32% from a year earlier, to a record 20,026..a full 40% of all the area’s homes for resale aren’t even occupied’
‘We’re still getting people from California willing to pay higher prices,’ Dawley said’
For a state that prides itself on RE savvy, it seems that neighboring states are starting to look at them as RE rubes.
No, the California buyers are just more “sophisticated” than the rest of us, that’s all.
Personally, as someone who wishes to buy in California in a few years, I’m happy to see this exodus that’s going on. It has to be an exodus. There are just too many empty homes sitting for sale. I don’t know if retires have left the state and just not finished cashing out or if flippers are left holding the bag. My sources are hinting that school enrolment will be done this fall. The fact is, prices cannot drop fast enough to stop the exodus. Home prices are so far beyond viable in California that people will keep “cashing out” as home prices plummet. Think how much “instant equity” someone who bought prior to 1998 is holding onto! In fact, I bet once its common knowledge that we’re past the peak, we’ll see an inventory spike as all of those that wish to cash out stop sitting on the sidelines drooling as their home appreciates and instead jump into the selling bandwagon.
The argument that home buyers are more mature than renters isn’t holding much water right now (exception, anyone who bought prior to 2000 and hasn’t HELOC’d themselves to death).
Neil
‘Think how much “instant equity” someone who bought prior to 1998 is holding onto!’
I’m thinking lots of instant equity was spent on Starbucks, gambling trips to Vegas, expensive vacation, Beamers, boats, RVs, granite counter tops, and cheap manufactures from China.
The Chinese economy is going to take a hit when the US consumer slows down. May be a worldwide slowdown.
Hang on to your cash.
Just think how far someone who is selling a home purchased pre 98 can drop their price to undercut all the other home sellers! Get a few of those guys who are sitting with empty houses motivated to sell and we will have some fireworks for sure!
“Rubes” would be a good description of the typical CA buyer who thinks he or she is a RE genius merely because they were in the right place at the right time.
OT… For those who are intrested…
Pulte Homes Reports Second Quarter 2006 Financial Results
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B87D62864%2D8AE4%2D4531%2D9765%2D0B9FE7AEE9D1%7D&siteid=mktw&sid=3602&symb=
Meritage Homes Reports Record Second Quarter Earnings and Adjusts 2006 Guidance
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B3AA07667%2DA64C%2D4D29%2D86CB%2D57D120B3BC4B%7D&siteid=mktw&sid=117207&symb=
“‘The resale segment continues to be gripped by the investor hangover that is like a black cloud of inventory,’ Home Builders Research President Dennis Smith said.”
Black clouds often precede twisters, which are highly devastating for property values.
How can I compete with builders offering 11 or 13 percent (commission)? You can’t.
Yes you can, you doorknob. You see, what your builder is telling you is that your house has actually dropped 9%-11%. Why? Because the normal commission paid to a sales agent from a builder is 2%. By paying someone 11%-13%, he’s discounting 9%-11% off his purchase price. So, in order to compete, you take his 9%-11% discount and raise his discount a few percent more and you’ll move your house (I’ll call it a 15% reduction to beat his deal). If you see these type of builder incentives, learn how to do the math and you’ll be able to compete. It’s for reasons like this that a lot of people do not even realize that the builders have already hosed them!
nnvmtgbrkr,
I really appreciate your posts….I always need help with the math, and you’re helpful…thanks!
Actually, if you’re paying 2-3% on a house and the builder’s paying 13%, you’re going to have a tough time getting realtors to work as hard for you as they will for the builder. They’d rather get the builder’s commission.
Reduce the price enough, and you’ll make a sale, but I wouldn’t count on agents beating a path to your door so long as they can sell the homes they get 10% commissions on.
So that’s how builders are reducing prices behind earlier buyers back. Surely realtors are giving buyers a cut of this 13%.
Let’s see: 13% commission, free 50K upgrades, that’s 80K drop for a 300K price tag.
Yep!
“How can I compete with builders offering 11 or 13 percent (commission)? You can’t.”
You can! It is too easy — just lower their price to a level which reflects the relative value of your used home relative to the value of the new homes, including the value of any discounts used to sell them and a further reduction to offset the new home premium relative to the value of comparable “pre-owned” homes.
“There is nothing more attractive right now than Nevada.”
HouseValues shares fall on earnings release, CFO departure (11:33 AM ET) SAN FRANCISCO (MarketWatch) — HouseValues Inc. (SOLD : SOLD
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, , ) shares were down 7% at $5.81 in mid-day trade Wednesday after the company late Tuesday reported its second-quarter financial results. HouseValues reported earnings of $1.89 million, or 7 cents a share, down from $3.71 million, or 14 cents a share, in the year-ago period. Revenue at the Kirkland, Wash.-based provider of real estate information and services rose to $25.9 million from $20.6 million. Analysts polled by Thomson First Call had forecast earnings of 6 cents a share on revenue of $26.6 million. HouseValues also said it has authorized a stock buyback of up to 2 million shares. The company added that it has decided to discontinue its practice of providing guidance, and that it no longer expects to achieve its previously provided outlook. In addition, Chief Financial Officer John Zdanowski has left the company, and Jacqueline Davidson has been named interim CFO.
Black Clouds?
With apologies to Jessie Colin Young:
Darkness, darkness, be my zillow,
Take my price, and let me sleep.
In the coolness of your data,
In the silence of your deep.
Darkness, darkness, has me yearning,
For a price that cannot be.
Keep me my mind from constant turning,
Toward the deals it cannot see,
Deals it cannot see,
Deals it cannot see.
Had to finish it, love that song:
Darkness, darkness, long and lonesome,
Ease the day that brings the pain.
I have found the cliff of value,
I have known the depth of fear.
Darkness, darkness, be my blanket,
Cover me with endless night,
Take away the pain of knowing,
Fill my bankruptcy with light,
Bankruptcy with light,
Bankruptcy with light.
Darkness, darkness, be my zillow,
Take my deed, and let me sleep.
In the scorching of your desert,
In the silence of your deep.
Darkness, darkness, be my blanket,
Cover me with endless night,
Take away the pain of knowing,
Pack my car, and travel light,
Pack and travel light,
pack and travel light.
more OT from NPR today, not sure if already posted:
http://tinyurl.com/zwyfj
Marketplace Report: Housing Market Cooling Down
Day to Day, July 26, 2006 · New data suggests the housing market in the United States is cooling off after years of record-breaking rise in prices. Steve Tripoli of Marketplace discusses what the downturn means for the U.S. economy with Noah Adams.
Not to say that LV is wonderful, but is anyone else surprised that their inventory hasn’t spiked as much as Phoenix or other places in the West? Inventory up 32% is pretty small when you compare it to the 100%+ increases in inventory in Phoenix . . .
Actually I heard more ancedotal evidence of people retiring to Las Vegas than I do PHX for some reason.
No state income tax?
Considering that there’s still a large segment of the population that’s clueless to what’s happening in the real estate market, it going to get a whole worse in the next couple years. Fear is just starting to settle in for sellers, but there’s still not a general fear among buyers.
“Warren Pincus is having a hard time selling his 1,600-square-foot, two-story home in the gated Elk Ridge community in northwest Las Vegas. He’s lowered his asking price from $315,000 to $307,000
LMAO, no shit sherlock, you’re going to have a hard time selling that home. (I saw a pic of it on the RJ. The biggest architechtural highlight of the home was its oh so appealing aluminum garage door gracing the front, and notice the two foot yard of desert landscaping that passes for a “front yard”).
I live in this couple’s area, Centennial Hills. His development is within walking distance of my rental house.
Not only is the home overpriced, all the homes in that development have tiny lots…maybe 6 feet between homes if that. And “backyards” are really patios that you can step on have a smoke, all while touching a cinder block wall that marks the boundary of your yard. So basically, his “single family home” is a glorified townhome. That’s an okay buy if you’re young and the home was priced maybe about $150Kish, but not if your trying to raise a family.
In fact, all the houses in the entire Centennial Hills area are like this…homes crammed on tiny lots, with no yards or backyards. I don’t see how anyone can raise a family in them. In my development, the kids have to literally play in the streets because there are no sidewalks, front yards, or back yards for them to play in (and the ones that do have the yard’s landscaping restricted to rocks and desert plants, with limited amounts of grass per the HOAs). The local park in my development is maybe a couple hundred of feet wide and most people use it as a doggy toilet because thier dogs have no yard of their own to go in.
Despite this, I love living in Centennial Hills…but then again, I know better than to ever try to raise a family out here. But for singles, retired couples, and childless couples, the area is nice…I have everything I need close to my house. But as for being “family friendly”…this area ain’t it.
40% of the area homes aren’t occupied???
Is there any way to ascertain the occupancy percentage in other bubble markets?
Here’s an article about the negative impact of the Las Vegas housing market on above-average wage earners, from In Business Las Vegas:
“Four years ago, affordable and attainable housing were hardly discussed. The need didn’t appear to be there, especially in a city that touted low housing costs as a recruitment tool for many of the city’s industries…[N]ow that that middle- and upper-middle-class families are also being affected, the issue has come to the forefront of discussions, meetings and lectures.”
http://www.inbusinesslasvegas.com/2006/07/21/realestate.html
Trustee’s Sales Calendar from the nevada Lega news dated July 26, 2006. There are 121 Notice of Defaults filed for this date.
18% will go full term (3 months and 21 days) and be sold at Trustee Auction usually back to the lender. Last year, on this date, there were 9 NOD’s…It looks like the HELCO spicket has been turned off. These loser will be flooding the rental market in 3 months, and those empty houses will have tennants
Here’s a really good article comparing the local-market casino monopoly Station Casinos (STN) to the Vegas housing market. The graph correlation is uncanny.
http://yahoo.smartmoney.com/barrons/index.cfm?story=20060726
BTW, the stock has plunged from it’s 52-week high of $80/share to $53/share. Does one need any more proof where the housing market is headed…?